The Fair Work Commission’s Expert Panel for annual wage reviews (Panel) today published its annual wage review under the Fair Work Act 2009 (Cth).

The outcome of the Panel’s review is that from 1 July 2017:

  • modern award minimum wages will increase by 3.3% and
  • the National Minimum Wage will increase to $694.90 per week (up from $672.70 per week) or $18.29 per hour (up from $17.70 per hour).

The Panel declared that over 2.3 million employees who are reliant on minimum rates of pay will be directly affected by the increase.

Factors influencing the Panel’s decision

In coming to its decision, the Panel cited numerous key changes in the economic environment, including the increase in real net national disposable income, the current heightened level of labour productivity growth and the positive assessment of business conditions.

The Panel also cited a range of social and other considerations, in particular, the promotion of social inclusion through increased workforce participation, the relative living standards and the needs of the low paid, and the principle of equal remuneration for work of equal or comparable value.

The increase falls well short of the $45 per week or 6.7% increase sought by the Australian Council of Trade Unions (ACTU). The ACTU was pushing for this increase as part of its effort to raise minimum wages towards a new benchmark against the average weekly earnings.

In making its decision, the Panel acknowledged that to grant an increase of the size proposed by some parties would be likely to have adverse employment effects on those groups who are already marginalised in the labour market, with a corresponding impact on the vulnerability of households to poverty due to loss of employment or hours.

What does this mean for employers?

The decision of the Panel means that employers who pay their employees at or close to the minimum wage rates pursuant to a modern award, the National Minimum Wage or other industrial instrument, will be required to increase their employees’ pay in the first pay period on or after 1 July 2017.

Employers who pay their employees above the minimum wage rates may be able to absorb the increases without making any changes.